2019 (1) TMI 110 - AT - Income Tax

Revenue's appeal dismissed by Tribunal due to low tax effect under CBDT Circular; Liberty to file application.

The appeal filed by the Revenue in ITA No. 6577/Mum/2017 was dismissed by the Tribunal due to the tax effect being less than Rs. 20 lakhs, in accordance ... Maintainability of appeal - tax effect - monetary limits - Held that:- The tax effect in this appeal filed by Revenue is undisputedly below ₹ 20 lacs and thus keeping in view CBDT circular no. 3/2018 dated 11-07-2018, we are inclined to dismiss this appeal filed by Revenue due to low tax effect involved in this appeal which is below ₹ 20 lacs . Moreover , it is not also brought to our notice by learned DR that this appeal is covered by any of the exceptions to said circular dated 11.07.2018 as notified by CBDT. Thus, since both the parties have concurred before the Bench that this appeal is covered by CBDT circular no. 3./2018 dated 11.07.2018, we are inclined to dismiss this appeal filed by Revenue on the grounds of tax effect being less than ₹ 20 lacs - Decided against revenue Issues Involved:1. Maintainability of the appeal filed by the Revenue due to low tax effect.2. Applicability of CBDT Circular No. 3/2018.Issue-wise Detailed Analysis:1. Maintainability of the appeal filed by the Revenue due to low tax effect:The primary issue addressed in this judgment is the maintainability of the appeal filed by the Revenue on the grounds of low tax effect. The Revenue's appeal in ITA No. 6577/Mum/2017 was dismissed because the tax effect involved was less than Rs. 20 lakhs. This decision aligns with the CBDT Circular No. 3/2018, which sets the monetary limits for filing appeals by the Department before various judicial forums to reduce litigation. The Circular specifies that appeals should not be filed in cases where the tax effect does not exceed Rs. 20 lakhs before the Appellate Tribunal, Rs. 50 lakhs before the High Court, and Rs. 1 crore before the Supreme Court.2. Applicability of CBDT Circular No. 3/2018:Both the learned Departmental Representative (DR) and the Assessee's Representative (AR) concurred that the appeal was not maintainable under the CBDT Circular No. 3/2018. The Circular, issued on 11th July 2018, revises the monetary limits for filing departmental appeals to reduce litigation. Paragraph 3 of the Circular explicitly states that appeals should not be filed if the tax effect is below the specified limits. The Circular also applies retrospectively to pending appeals, as stipulated in paragraph 13, which mandates that pending appeals below the specified tax limits may be withdrawn or not pressed.The Tribunal noted that the tax effect in the present appeal was undisputedly below Rs. 20 lakhs and, therefore, dismissed the appeal in line with the Circular. The Tribunal also clarified that the appeal was not covered by any exceptions to the Circular, such as issues involving the constitutional validity of provisions, Board's orders being held illegal, Revenue Audit objections accepted by the Department, or additions related to undisclosed foreign assets/bank accounts.The Tribunal emphasized that the dismissal was solely due to the low tax effect and did not comment on the merits of the case. The Tribunal granted liberty to the Revenue to file a miscellaneous application for recall of the order if they wished to agitate the matter in accordance with the clauses of the Circular.Conclusion:The appeal filed by the Revenue in ITA No. 6577/Mum/2017 was dismissed due to the tax effect being less than Rs. 20 lakhs, in accordance with CBDT Circular No. 3/2018. The Tribunal did not comment on the merits of the case and provided the Revenue with the liberty to file a miscellaneous application if they wished to pursue the matter further. The order was pronounced in the open court on 01.01.2019.